The Actionable Guide to Hiring Effective Employees

By Eric

Did you know that a second-level manager who earns $62,000 a year and has been terminated after 2.5 years can cost you $800,000 or more?

I sure didn’t.

Often times, hiring is sacrificed in place of working inside of the business rather than working on it. This is self destructive behavior for entrepreneurs because hiring is one of the most important responsibilities of founders.

Just think about it for a second. Sports teams are always looking for the best people to win a championship. That’s why they have general managers, coaches and scouts constantly on the lookout. That’s why the draft process is so rigorous.

It’s easy to blame other people when things are going bad but think about it for a second. If things are consistently going bad, is it really a people problem? Or is it a process problem?

Likely the latter.

It’s been reported that bad hires result in a -298% ROI on average; a statistic we all want to stay away from.

In this post you’ll get actionable steps to help you develop or improve your hiring processes so you can ultimately save more time and grow your business faster.

1. Build A Hiring Funnel

At each stage of your hiring process, you should be relentlessly eliminating candidates and moving the best ones to the next stage. This is called a hiring funnel.

A hiring funnel organizes your sales process and puts a more data driven approach to it. Track the percentage of candidates that pass through each stage to figure out how you can continue to optimize leakages in your funnel.

When you are posting a job ad, you can expect to get a disproportionate amount of unqualified versus qualified candidates. It makes your life hard when you have to sift through hundreds of resumes to just get through the FIRST part.

Did you know there are actually questions that are illegal for you to ask as an employer? For example, you can’t ask about age because hiring based on someone’s age is illegal. You can’t hire based on sexual preference or religion either. Make sure you outline the illegal questions for your country or state and document them in your hiring process (you are documenting your processes right?).

4. Have Core Values

Great companies have strong core value that set the foundation for culture. Each and every one of your employees should live and breathe your core values. It’s the basis of hiring and firing people. It’s your identity.

Zappos CEO Tony Hsieh is known for his relentless focus on culture (which he writes about in his book Delivering Happiness). That shouldn’t be a surprise considering that he has lost over $100 million on bad hires. Watch the video below to get a better understanding of his approach to core values and culture:

5. Ask The Right Questions

“The most serious mistakes are not being made as a result of wrong answers. The true dangerous thing is asking the wrong question.” – Peter Drucker

You absolutely need to figure out the critical questions to ask before interviewing for a new role. That should be a given; but often times people take a haphazard approach to hiring and go mostly based off of ‘gut feeling’.

That’s not enough.

If you’re not sure what general questions you should be asking, you can use Google to get started. For more senior/complex roles, if you’re really in over your head you can talk to people you know that might be in that field to get a list of their ‘must-have’ questions. Using executive recruiters isn’t a bad bet either because they have forged these relationships already and know the right questions to ask (saving you a lot of time and energy).

6. Look for deep experience

Asking candidates what they will do if they are hired is important but what’s more important is looking for deep experience in the role. Past indicators give you the strongest signal on whether a prospect has what it takes to succeed in a given role. Sometimes a VP of Marketing from a big company isn’t a match as a VP of Marketing for a fast-growing startups because they’re two different mentalities.

Mr. Big Company VP of Marketing can paint a nice vision that will sell you but that can be a fatal path. I’ve seen that happen far too many times. For this scenario, you would ideally want someone with experience with digital marketing that is on the upward trend. Someone that is willing to roll up your sleeves. Mr. Big Company would be more of a fit for bigger branding initiatives when the company is at a mature stage; not right now.

That’s why you need to look at DEEP experience.

“But what if I’m looking for a more entry level role e.g. sales prospector?”

No problem. You’re still looking for very specific experience.

For example, one element that most successful salespeople possess is being a part of a sports team in high school or college. Leadership roles and trophies/championships are even better. If they have an entrepreneurial spirit (e.g. starting a club) then they stand above the crowd.

Key Takeaway: figure out the right deep experience that will make a person wildly successful at a role before you pursue.

Tip: A work history form (usually a couple of pages long) filled out by a candidate can help paint a significantly clearer picture for you.

7. Have a role scorecard

A role scorecard helps organize your candidate’s strengths and weaknesses in a spreadsheet. The spreadsheet would include your core values, overall experience, overall attributes and additional line items that your company finds important. Here’s a look at what a role scorecard would look like:

Creating a role scorecard allows you to compare candidates side-by-side on a more quantitative basis. You can then layer in your overall ‘gut feeling’ about the individual and make a final decision with your team. Every bit of information counts when you’re devoting time and money to making your company world-class.

Software companies are coming up with solutions to make hiring easier. They’re intuitive and ultimately help you organize your thoughts.

Here’s a list of helpful tools to get started with:

LinkedIn Recruiter – with over 322 million users and 187 million monthly visitors, LinkedIn is the largest professional social network so it naturally makes sense to mine prospects using their recruiting tool. The tool is simple to use and the analytics it provides helps you continue to refine your recruiting process.

JobHive – JobHive combines user-friendly hiring software, with tools to post jobs, attract talent, and make great hires. It allows you to pre-screen candidates using video – another layer that helps you eliminate unqualified candidates.

ZipRecruiter – ZipRecruiter is an all-in-one hiring tool that allows you to post jobs to multiple job boards, manage your recruiting process with a simple dashboard, and search for resumes in their database. ZipRecruiter allows you to post to sites like Monster.com, Indeed and Craigslist so you can save time.

AngelList – AngelList allows you to post your jobs absolutely free of charge. The quality is very high and the site is used by popular angel investors and venture capitalists to syndicate deals.

9. Reference Checks

Reference checks are a staple in every hiring process. But just how well are you executing on them? Asking the right reference check questions is just as important as asking the right interview questions. One helpful reference check question I always like to ask is:

On a scale of 1-10, how would you rate Sarah compared to her peers?

You’ll almost never get a 10. That’s when you follow up with ‘why not a 10?’. That’s when the real meat of the reference check starts to come in.

Keep in mind most references will be the candidate’s first choice and they’ll be programmed to say great things. It’s helpful to ask the references for additional references that can vouch for the candidate so you won’t get responses that are as filtered as the 1st degree references.

10. Decide on Salary/Equity

It’s important to figure out what the market is offering in terms of salary/equity so you can compete. You can use sites such as Glassdoor or AngelList to see what companies are offering. Here’s a snapshot of what AngelList looks like:

Bonus Tip: You can purchase data from Venture Assembly to show you salary/equity across 250+ startups if you want to save time.

11. Write An Effective Job Description

Writing a solid job description is an absolute must. It’s like writing great sales and marketing copy because the intent is to sell your company to prospects. With the average attention span today dropping to 9 seconds, it’s in your best interest to make a great first impression; or risk losing out on the additional revenues that an A-player can potentially generate for your company.

Key points to include in your job description:

Company introduction – talk about what your company does and what the overall mission is.

Role – write a paragraph introducing the exciting role.

Responsibilities – what would the ideal employee be doing? Bullet point this out.

Requirements – what does the ideal candidate have? A degree? years of experience? certifications? proficiencies with programming languages?

Video (optional) – a video showcasing your office, team and CEO goes a long way in personalizing the experience and making people feel like they know you.

Benefits – are you offering insurance? 4-day work weeks? 401k?

Salary (optional) – some companies choose to show their budgeted salary. Some don’t. Your call.

Conclusion

Hiring effective employees is already hard enough with a process. You make it exponentially harder for your company to grow without one. As an hiring manager, it’s your responsibility to get this right from the beginning or risk losing out on 5 figures or more on EACH bad hire.

Disclaimer: As with any digital marketing campaign, your individual results may vary.

Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.